AVON LAKE POWER PLANT KEY ASSET FOR NEW OWNER

The Avon Lake power plant approaches 2000 like a veteran player on a pro sports expansion team. With new owners in a new league, expectations are high for the plant and its 100 employees, but performance and competition will determine its success.
The 50-year-old coal-fired generating plant, built and operated by Cleveland Electric Illuminating Co., was auctioned off last month by its interim owner, Duquesne Light Co., to a brash new contender in the electric generating business -- Orion Power Holdings Corp. The Avon Lake plant now enters a second phase of its history as a key component in Baltimore-based Orion's plan to contend in the electric industry's brave new world of free market competition, due to begin in Ohio in 2001.
'At 739 megawatts, it is our largest plant in terms of generating capacity, and we think it is well-maintained and flexible,' said Tom Webb, vice president for asset management at Orion, an 18-month-old joint venture of GS Capital Partners II, an investment affiliate of Wall Street financial giant Goldman Sachs Group Inc., and Constellation Power Source Inc., a subsidiary of Constellation Energy Group, parent of Baltimore Gas and Electric Co.
'It is also our first coal-fired plant, and will play an important role for us as we seek to compete,' Mr. Webb said.
The machinations that brought the Avon Lake plant, a familiar fixture on the Lake Erie shore west of Cleveland, under the control of a holding company are as arcane as any sports trade.
It was a piece in a trade that saw Akron-based FirstEnergy Corp., CEI's parent company, give up ownership of three plants in Ohio in exchange for Du-quesne Light's shares in the Perry and Beaver Valley nuclear power plants. Pittsburgh-based Duquesne in turn had to sell the Avon Lake plant to meet requirements of Pennsylvania's electric deregulation program, which took effect in January. Orion is expected to assume full control of the generating plant next April.
Orion already has indicated it will negotiate a con
tract with the Utility Workers of America Local 270, which represents about 150 current and laid-off workers at the plant. The 1,700-member local has had a stormy relationship with FirstEnergy, including suffering the permanent layoff of hundreds of its members in the utility's pre-deregulation restructuring and the imposition by the company of a contract to which the union did not agree.
'So far I have been very impressed with the Orion team,' said Robert Chet, Local 270 president. 'They assure us that they intend to operate the plant, and they have said they will recognize Local 270 and hire our members when they have full control.'
Orion is depending on the plant's experienced workers to make it an efficient part of the company's growing portfolio of non-nuclear power plants, Mr. Webb said.
That portfolio, assembled in just 18 months, includes 71 small hydroelectric plants in New York state, three oil- and gas-fired generating units in New York City and one in Syracuse, N.Y. Together, all of Orion's plants can generate a total of about 1,855 mega-watts, only about twice the amount that the Avon Lake plant can produce alone.
Orion is continuing to search for power plant acquisitions in the East and Midwest and recently has taken on new investors. Mitsubishi Corp. and Tokyo Electric Power Corp., both of Japan, have committed $200 million to Orion, beginning next year.
While conceding that operators of coal-fired plants face the possibility of costly retrofittings and modifications to meet more stringent environmental laws in the future, Mr. Webb said Orion plans to seek out more fossil fuel plants to add to its largely hydroelectric-generating portfolio.
'It is not that we do not want coal-fired plants,' Mr. Webb said. 'In fact, the experience of Constellation, our parent company, is primarily with coal-fired plants. This (the Avon Lake plant) was the first one we found that suited our needs.'